Understanding Tacit Knowledge to Mitigate Risks in the AI Era
Executives Need to Understand Difference Between Tacit and Explicit Knowledge
Introduction
In the rapidly evolving landscape of artificial intelligence (AI), which we call the "Cognitive Revolution," executives face a critical challenge: how to maintain competitive advantage while leveraging AI technologies. This article introduces the concept of "Own Your Own Intelligence" (OYOI) and explores the crucial interplay between tacit knowledge, AI, and cloud providers. For companies anticipating a 5-15% revenue impact from AI in the next three years, or those relying on AI for competitively differentiated processes, OYOI is not just a strategy—it's a board-level imperative.
Key Concepts: Tacit, Explicit, and Emergent Knowledge
To grasp the implications of AI on business competitiveness, we must first understand three types of knowledge:
Explicit Knowledge: Information that can be easily documented, shared, and applied, such as manuals, databases, or formalized processes.
Tacit Knowledge: This is deeply ingrained, intuitive knowledge typically gained through experience. It includes insights, techniques, and processes that are not easily codified or transferred.
Emergent Knowledge: A new concept arising from the AI era, representing insights and patterns that emerge when vast amounts of data are processed by AI systems, particularly Large Language Models (LLMs).
LLMs: A New Paradigm in Technology
LLMs represent a significant departure from traditional technology stacks. Unlike databases or applications that operate independently, LLMs can profoundly impact application output. This creates a more integrated technology stack, where technology layers are tightly linked. Executives DO need to know which AI chips, LLMs, and cloud providers are being used in the most important companies processes being automated by AI (we call these knowledge production lines”).
How LLMs Interact with Different Types of Knowledge
LLMs have a unique ability to process and transform knowledge:
They can sift through vast amounts of explicit knowledge, finding patterns and relationships that might be invisible to human observers.
They can capture aspects of tacit knowledge embedded in text, images, and sounds, making previously expert-only insights more widely accessible. They also can do this at a scale and cost point that was unimagined just 18 months ago (e.g. summarize every public appearance and written article by every Moderna research scientist and executive on their approach to drug development).
Through this process, LLMs generate emergent knowledge—new insights and capabilities that arise from the combination and analysis of diverse data sources.
The Role of Cloud Providers in AI and LLMs
Major cloud providers have unprecedented market power in the AI space. They not only provide the infrastructure to run AI models but often develop and offer their own LLMs and AI chips. This vertical integration gives them unique advantages but also poses potential risks for businesses relying on their services. As cloud providers drive to increase market capitalization, an over-reliance on one could pose a competitive risk for your firm and/or loss of pricing power.
Own Your Own Intelligence (OYOI)
OYOI is a framework to identify issues and an approach that emphasizes maintaining control over a company's unique intellectual assets in the AI era. It involves, among other things:
Identifying your organization's critical tacit knowledge and emergent knowledge
Understanding how this knowledge might be captured or replicated by AI systems.
Developing strategies to protect and leverage this knowledge in AI-driven processes that support sustained competitive differentiation
Connecting OYOI to Tacit Knowledge and Cloud Provider Risks
When companies use cloud-based AI solutions, they potentially expose their tacit knowledge to external entities. Here's how:
Training data used for AI models may contain valuable tacit knowledge.
The patterns and insights derived by LLMs could encapsulate a company's unique expertise.
Sharing desired features in vendor roadmap discussions can reveal unique strategic insights.
Cloud providers might inadvertently (or intentionally) use this emergent knowledge to benefit other clients or themselves.
Case Study: Healthcare Diagnostics
Consider a health insurance firm implementing an AI system to process doctor-patient conversations. This system could:
Capture explicit knowledge (patient data) and tacit knowledge (doctor's diagnostic reasoning).
Generate emergent knowledge in the form of new diagnostic patterns or efficiency improvements.
If hosted on a cloud platform, potentially expose this valuable emergent knowledge to the cloud provider or other clients (consider 1% chance scenario where true AGI occurs in 5 years and the AGI calculates that the risk of breaking your contract on provided data use is financially worth it)
Actionable Advice for Executives
Assess AI's urgency for your company using frameworks like WINS (Words Images, Numbers and Sounds) framework highlighted in HBR.
Educate your board and management team on OYOI principles and their strategic importance.
Identify and catalog your organization's critical tacit knowledge.
Consider developing in-house AI capabilities for critical, differentiating processes underlying your unique competitive advantage
Evaluate existing and future AI and cloud solutions with OYOI framework in mind, and negotiate clear terms with technology partners regarding data usage and model ownership.
Participate in emerging government and industry efforts to counter-balance a over-concentration of market power
Conclusion
In the Cognitive Revolution, understanding and protecting tacit knowledge is crucial for maintaining competitive advantage. By adopting an OYOI approach, executives can harness the power of AI while mitigating the risks posed by over-reliance on cloud providers. Remember, in the AI era, your company's most valuable asset might not be the data you have, but the unique ways your organization interprets and applies that data.
Learn more and discuss OYOI this Wednesday, Sep 11 at noon EST. Register here
We have an outstanding set of speakers:
Sandy Pentland
HAI Fellow at Stanford and Professor at MIT
He serves on the Board of the UN Global Partnership for Sustainable Development Data, advisory boards of Consumers Union, OECD and the Abu Dhabi Investment Authority Lab
Pentland is one of the most cited authors in computer science with an h-index of 155
He co-led the World Economic Forum discussion in Davos[3] that led to the EU privacy regulation GDPR
Ariel Soiffer
Partner, WilmerHale, a global law firm
John Sviokla
Chairman and co-founder GAI Insights and Harvard Business School Executive Fellow for Enterprise AI
Former PwC Partner and Harvard Business School Professor
Register here.
FYI: My upcoming travel and speaking schedule
Sep 9: Moderating 10:15a ET Data Dynamo panel at Boston Startup Week (in person and virtual)
Sep 10-11: AI Conference in San Francisco (Email me if you are attending)
Sep 11: Noon EST - moderating Own Your Own Intelligence webinar
Sep 12: Moderating 2 panels at “Building AI Ready Workforce” Conference with MassTLC, McKinsey, and others.
Sep 17: AI Week Columbus (Ohio): Keynote “Own Your Own Intelligence” and Fireside chat on “Coming SEO Bloodbath)
Sep 23: 6p Speaking at Growing the Massachusetts AI Ecosystem (Cambridge Science Festival Event)
Sep 26. Speaking at the AI & EdTech at the Intersection Showcase at Microsoft NERD Center
Sep 30-Oct 1: MIT EmTech at MIT
Oct 2: Keynote at AI Realized 2024 in San Fran
Oct 7-8: Generative AI World 2024 - Boston
Oct 29: Own Your Own Intelligence Webinar at Noon EST.
Nov 19: Half-day in-person working session at Harvard University on Own Your Own Intelligence
Jan 22: Imagination In Action Davos- Own Your Own Intelligence, Davos Switzerland
Learning Lab tomorrow, Sep 9. Sign up here
Oct 7-8 (2 days. in-person, paid): GAI Insights’ Generative AI World 2024 Conference in Boston, MA at the beautiful Intercontinental Hotel in Boston on Boston Harbor and focuses on driving business value with enterprise GenAI with case studies. Audience titles; Board member, CEO, SVP Digital, Chief Innovation Office, CTO, CDO, and AI team leads. Details: 350 attendees, 60 speakers, 50 case studies, 15 AI startups, and 15 exhibitors. TICKET PRICES GO UP SEP 15
“Lost time is never found again.” - Ben Franklin
Onward,
Paul
Tacit knowledge is the ultimate human superpower, especially in an era dominated by AI. While AI can analyze vast amounts of explicit and emergent knowledge, it cannot replicate the intuition, experience, and context-based insights that make tacit knowledge invaluable. This deeply ingrained understanding, shaped by years of personal experience, empowers individuals to navigate complex, ambiguous situations that AI struggles with. In fields requiring creativity, judgment, and strategic thinking, tacit knowledge remains a competitive differentiator, ensuring that human expertise is irreplaceable in the Cognitive Revolution.